tv Power Lunch CNBC May 29, 2015 1:00pm-3:01pm EDT
>> i'm keeping my eye on starbucks. i had my eye on it for a while. >> power lunch begins now. >> halftime is over. power lunch and the second half of the trading day start now. >> thank you very much. welcome, everybody. gdp falling in the first quarter and what will growth in the united states look like in the second quarter and what's it mean for the feds next move. what does it mean for equities. the major indeces are lower across the board. >> the potential for growth
after we saw contraction and our steve liesman has new information on where the crowd is standing at this time. >> thanks very much. from positive to negative what was first reported at 0.2%. the result of less growth and it made econ 50s less optimistic. our cnbc update falling by 2/10 of a percentage point. with a wide range to 4%. let me show you where people are. at 4%. goldman right about the middle at 2.4. morgan stanley. we are now including that atlanta fed in the survey at 0.8%. some of the commentary saying we lowered the q2 estimate to 2-2 due to downward revisions of sales. barclays saying it will point it an acceleration in activity in q2. the under performance of the
economy is likely to extend the timeline for the first fed rate hike. meanwhile new research shows the first quarter productivity data are also suspect. in part because they rely on the gdp data. productivity a critical measure averaging 1.1% in the first quarter over the past 30 years. that compares to the growth of 2%. the past six years, the nation's output per hour has been nothing short of a dismal shrinking. we uncovered a 30-year weekend. they compiled it and acknowledged the problem and will revise the data with the july 30th release of second quarter growth. productivity is calculated by the bureau of labor statistics that use gdp data that revises the output per hour. the supervisor guys said they told cnbc anything in the data
will be in the productivity and they will have to revise their data as well. we will talk later this hour about whether or not you can trust any of this. >> steve, thanks very much. # the s&p up 1.5% on track for the second best monthly gains for the year. what about june? what does history tell us? here with the numbers that are discouraging. >> they are discouraging. if you look at the last ten years, on average the market is down for the month of june and the odds are not in your favor. 60% of the time it's down about 1.3% over the june period over the last ten years on average. let's look at the sectors that outperform overall. if you look at the hot sectors,
utilities is what you may want to watch. up 60% of the time and the return is up 1.33%. energy up six out of the last ten years and the average return is 3/4 of 1%. down eight out of the last ten. about 2% for materials. these tend to under perform and have historically. past performance, no indicator of the future. sectors to watch, the full story and all the numbers up on cnbc.com right now. back to you. >> to jackie at the nymex with the news alert. >> good afternoon to you. that's right. baker hughes out with the weekly recount decline numbers. oil rigs are down 13 this week. to compare this to last week it
was flattish. it's a steeper decline that has been supportive to prices. the last we checked we crossed over the $60 mark. we do have a big move on our hands, about 4%. a couple of things that traders are watching and they are looking at the u.s. complex right now, a perceived boost in demand that is helping the prices move forward. also geopolitical issues in saudi arabia. isis taking responsibility for an attack on a mosque sending us higher as well. the recount declines are supportive of that move already. back to you. >> stocks down modestly today, but they are on track for a positive month since sell in may didn't work. new data including the number that steve talked about. chicago pmi showing weakness in the economy. will june and the summer months be volatile for investors? joining me in studio the chief investment officer at northern trust wealth management and u.s.
strategist at the global investor. on a scale of 1-10, how worried should we be about the u.s. economy. 10 being very worried? >> we are not that worried about the u.s. economy. the first quarter was weak and we had that last year. we haven't jumped out as we had hoped. it's slightly under 3%. we expect a recovery here. >> how worried should we be. you heard the reporting about a notallies in the data. how do you report it? do you trust it? how worried are you about the economy? we are not. we think there is a lot of opportunity going forward. the first quarter has been written off and now it's about incremental improvement. we are starting to see some
exciting signs. if you believe a recovery is predicated on improvement in the job market you should be excited about it. >> do you trust the data that year after year they have been bad numbers. do you trust it? >> data will never be perfect, but what we are starting to see and the fed starred to acknowledge it there is a kind of seasonal pattern and it stands to reason. if you go into malls in january, people are not spending. it makes sense that the first quarter is a disappointing time for us. add to that a lot of bad weather in the united states. you have what's going to be the most disappointing quarter. >> we have the groups trading lower. looks like you both like health care. let me ask you. you don't think the valuations
are too high as it has been the best performing sector? >> we are a bit concerned, but we do see the fundamental backbone being strong from both a supply and a demand perspective. there fundamental tail winds that we think will support health care stocks going forward. we are seeing heightened activity that provides more interest in the sector as well. >> you like it along with other winners. technology and consumer discretionary. you still see good value in the groups even though they have been the winners. >> particularly in technology. i would point to a pattern. you hear the old adage, sell in may. that's true except for technology. it does well in june. that's something we have seen historically and one of the grate strong months in the course of the year. there is a reason to be exciteed from that pattern, but also because if you look at the past the last four cycles technology held up nicely in that
environment. with expectations that we will see lift off soon it's a good place to be. >> quick answers. this year so far, active management outperformed indeces for the first time in a long time. is that likely to continue? is this a stock picker's year? >> absolutely. we have seen qe created an artificial environment where stocks are now standing on their own fundamentals and that means they can finally outperform. >> do you think they see it as a welcome tail wind to active strategies? we believe the market is pretty efficient. we believe strongly in having a core passive strategy if that's appropriate for investors. >> thanks very much. we will see you during the summer. have a great summer. go to power lunch right now. do not wait. do not hit pause. go now. see why christina is more critical last night. that is power lunch.
>> go, but keep the on. let's keep the check. the greenback woving gains of more than 2%. the dollar has been the strongest of the week. we saw the highest dollar in 13 years. tyler, a lot of people say the dollar's rally is getting back into high gear. >> thank you very much. breaking news from zurich. failing to get the 2/3 vote he needed to get another term as head of fifa. the federation of international football association is about to hold a second vote with a winner now needs just a simple majority. our wilfred frost is in zurich. wilfred? >> thanks very much. yes, indeed we go to a second round vote which was not expected with a simple majority needed. that happens tonight and it's likely to start within the next
half or narrow. the first round vote is going, but the casting does take a while. it took right about 60 to 90 minutes. we go to the second round vote after the surprise result we just had in the first round where the incumbent as you said failed to secure the 140 votes needed for a 2/3 majority. 133. prince elliott jordan doing better than expected. the question i suppose between now and the second is does anybody change their mind? do they spur it on by the better than expected vote to give him their support. possible, but clearly the president's lead is quite significant. after a torid week for the world of soccer people are hoping that after this election it could mark the start of a new corruption-free era for the sport and fifa. for that answer we have to wait a little longer. tyler? >> thank you very much. let's go to dominic chu for
breaking news. >> humana shares halted for trading right now on a volatile volatility trading curve. they spiked. this on a possible story here according to dow jones. they may be possibly exploring a sale a potential sale situation. we are watching the shares. they are not yet reopened. they are up by about 5%. we will bring in more on details. you can see here according to dow jones, they are working with bankers on a possible sale of the company. that's judge why the shares did spike. keep your eyes on the shares of humana. >> up 50% in the last 12 months. a lot of breaking new this is hour. we just got the latest rig count. 13 rigs going off line. has the oil economy finally hit bottom? plus floods in texas wreaking
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>> enzon stock up almost 40% this year. the datacenter is buying britain's telecitigroup for $3.6 billion creating the largest datacenter. they are up almost 18% for the year. tyler? >> take a look at the stunning footage from dallas texas. rescue crews very busy. listen to the sound there too. rescuing motor stuck in the rising floodwaters. more rain expected. here's greg pos telefrom the weather channel. >> it will be rainy today. we have showers and thunderstorms. some of those could be severe especially in parts of arkansas missouri and west texas and kansas. that's today, but i think as we go through the next couple of days things will change. if you look at the model forecast for today -- >> we will break in for breaking news. more developing news from fifa in zurich.
let's watch. that is the prince with the long time head of fifa. after the first vote where he failed to secure the 2/3 majority needed to win himself the term. the prince stepped aside. he didn't have a chance in the second vote which required a 50% majority. he didn't have a chance at that point. he surmised to go on to win the challenge. thru are looking live at the feed of an organization. really in turmoil and upheaval right now. >> i guess this would mean that they would win the election. he was the only other candidate. he withdraw and that leaves it to him to resume his tenure. >> she now the winner whether he will bey is claired so by a.m.
limation or whether there is a need for another vote is not clear to me at this point, but in any event, the winner of this is the long time head. what a terrorist and a crazy week. the economy is shrinking, but can you trust the data. find out about the impact that all of this data would have on fed policy. plus, hedge fund titan and billionaire investor paul singer said he found the next big thing to bet against and how you can trade it. plus -- >> coming up a power pitch start up turning the dial. >> we created hitch radio, the world's first instant messaging app for live broadcast radio. >> will it be music to their ears? >> it's a rarnlg and attractive market. >> student to find out. you had some blocks and you had major thoroughfares and corridors
that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back. we live in a pick and choose world. choose choose choose.
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aetna and cigna. humana is said to be working with goldman sacks on any potential deal and again, humana had a market value of $27 billion ahead of this particular move. we will keep our eyes on what's happening with humana up by about 16%. 1.7 million shares have changed hands. >> that are could be a big deal. back in zurich with the latest out of fifa. wilfred? >> tyler, thanks very much. prince elliott jordan conceded defeat to the president who is reelected for an unprecedented fifth term in office as the head of soccer's governing body of fifa. 15 or so minutes ago, he failed to win the majority need needed in the first round, but because of that gap between the two was so large, the prince decided to concede defeat. this has been a torid time for the world of soccer.
many believing that a need for change had to start from the top, but the 209 delegates that get to vote in this election disagree and they have reelected the president for the world of soccer, we hope that change can come despite no change of leader at the top. >> wilfred frost reporting from zurich for us. time for the power pitch where we give one 60 seconds to make his pitch to a panel of experts. will it be the next big thing. >> i'm the ceo of pitch radio. the world is changinging. radio is heard by% of the u.s. but the live nature makes it hard to share. we created hitch radio, the world's first instant messaging app for live broadcast radio. type in anything you want to hear and hitch radio will search 20,000 radio stations globally
to hitch a ride on the station playing it right now. when you find something you love, you can send an instant message to your friend. when they open it they will listen to everything and if they hitch a ride with you, you can take them from radio station to radio station around the world. imagine driving on the street lynning to the app through your blue tooth speakers and your radio station changes and you didn't change it. katy perry changed it because you can hitch a ride on a celebrity. they can take you with them as they hitch rides all over the world. download hitch radio today. >> welcome to today's power pitch. you just heard the pitch, but let's meet the panel. on set with us board number of the new york angels. she advises and invests in two dozen start ups. also mentor and venture capitalist is from a firm that invests in early stage start ups in advertising and marketing. in seattle is 23459 burgess, the
president of kor up group involved with more than a billion dollars in mergers and acquisitionkcquisitions acquisitions. many have sold to google, microsoft and yahoo. all the heavy hitters. great to have you with us. jessica? >> there is a lot of legal challenges around the music industry. how are you handling licensing and copyrighting and toileties for the artist payments around things like star drivers? >> we pay 75% of the revenue and they pay 100% of the royalties for every song that is played. there is no royalty challenge for us because we approach it for a service for radio and not a music service. >> what have been the main sources of the revenues. >> until we launched with the scale we are looking at looking to do it in this quarter. >> who do you see being the core consumer for something like this? are you going after millennials
and what will be the strategy? >> we are going after millennials and they are the ones who are sending messages that disappear like you can do with hitch radio. the acquisition is simple. it's radio station who is are promoting their own participation on their airwaves and the star drivers. it's that katy perry who goes to twitter and said hitch a ride with me. i'm star driving right now and she is sharing that with all of her fans. >> you are trying to be a lot of things to a lot of people. i like the pitch and the direct experience. but you are going after advertising and consumers and after radio stations. you are going to live or die based on whether or not you can get a lot of people on your app. to be blunt, the app is immature. what are you going to do to light a fire and get people engaged? >> we are launching with the
sexiness of stars and music. what's underneath all of these advertising revenue models that we have is this huge amount of data. this data is essentially the data that you are familiar with. we will be able to get into all that because we started up with music which leads to a lot of revenue streams. >> we heard what he had to say and we need to know if the panel is in or out. >> i think radio is a very large and attractive market and the team has industry knowledge, however i'm not convinced that this is going to be the break out app, especially given that there thousands of apps vying for consumer attention. unfortunately i'm out. >> what about you, jessica? >> i believe radio is a mass reach media channel, but music is a very competitive, unstable market place to even begin to be able to go against the domino
players. you have to have user adoption and a differentiated approach and support from the audience. i think there is a lot of unknowns and i don't see this being a lucrative opportunity for investors. for that reason i'm out. >> what are about you? >> i'm ready to give you credit. the company is more immature than you present it on your pitch, but you are going into a very interesting space with very few barriers and as an early stage investors, i would be ready to hitch a ride. >> you are hitching. we have two outs and one in. what do you think. >> i appreciate everyone's feedback. it is going to boil down to what is the consumer thinking and do they want to hitch a ride with live free content from all over the world. >> best of luck. we will get hitching. from hitch radio and the panel, alicia, jessica and matt. that is today's power pitch. >> your app and your company is immature but i love you none the less.
i'm in. are you in or out? tweet us your thoughts using #power pitch. for more on power pitch, this is powerlunch.cnbc.com. >> the dow cutting losses down to 54. missing the mark and questions about the reliability of the data. what other data could be flaw and what about the impact on the rate hike decision ahead. we'll be right back. ♪ ♪ ♪ at chase, we celebrate small businesses every day through programs like mission main street grants. last years' grant recipients are achieving amazing things. carving a name for myself and creating local jobs. creating more programs for these little bookworms. bringing a taste of louisiana to the world. at chase, we're proud to support our grant recipients and small businesses like yours. so you can take the next big step.
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$850 thousand. not bad. we go to dominic for more on humana. breaking news. >> the gains held for right now. they are up by about 17%. the headlines that it could be exploring a sale of itself and it received indications of interest from people like perhaps an edna or a cigna according to people familiar and this is not the deal talkser imminent or anything like that. there is possible interest there and we want to make sure viewers know that. we want to make sure you know
what's happening with organizations and hmos and the industry. among the names that are stronger in the trade, that comes for the last five minutes. again, humana up sharply about 2.7 million shares. the average of 1.1 million shares on a normal day. we will keep our eyes on humana. you want to watch the ednas and the cignas and others in the industry. back over to you. >> it's a huge story in that sector. we will follow that all afternoon. >> the commerce department revised and showed a contract hurt by hinder weather and widening def hit. now steve liesman and ron
insana. gentlemen, whether you quibble with the accuracy of the data and you have. >> we won that debate. it is important. >> it's important to realize the commerce that they acknowledged. >> but, whether it's off by x percentage or x 10ths, the picture of the economy is weak. how weak is it? >> that's the million question. here's when you get to the reason why it matters, it's because you don't know. most people believe it's probably a percentage point or two higher. >> that would then if do you this right, i believe depending upon when they announce that, does it take away. the trouble is it's not a really good way to run a railroad and nobody should be making decisions based on this one
quarter of growth. >> but you can based on railroads and if you look at the transportation average, it is rolling over. >> you are good. >> it's like you used to work in tv. >> we have been talking about the theory and whether or not it is generating a cell signal. it's end stage demand. transports continue to roll over relative to the dow. the dow is up more than one. they are widening. >> don't pay too much attention to that. doesn't that slow a little bit? if there was a 10% chance of a june rate hike, that went down to zero. >> i think june is off the table. >> i think that is off the
table, but remember what happened last year. # you come back near 4-6 and then you do 5. i will tell you, if that scenario repeats, you better think about faster rather than slower fed. if you have a second quarter bounce back it's really important to watch the data next week. go spinning on monday. followed by the big jobs report on friday, it will inform us. >> getting mixed data. they are both consistent with levels with which they raised rates in the past. we are getting divergent data. the chicago bmi and the transport irrespective of oil prices. >> keep saying gotta go. thanks guys. sarah? >> we top the go to the bond
pits. rick santelli tracking the action. >> refused, shoot the messenger. gdp on an annualized pace when you look at all quarters is subnormal. especially after recession. we never had that growth purt on a sustainable basis. it continues to maybe be the dynamic that pushes rates lower. when was the high yield. if you look at month to date it is skreming reversal. if you open it up to april and add a month, you can see this move is something to reckon with. let's keep that first april 1st date and the euro versus the dollar. the charts look similar, yes, they do. one thing different for the month of may. how do you spell break out. look at the chart. it's a wild month in favor of the greenback. back to you. >> 13-year high against the
that quarterly contraction you were talking about is .1% on the quarter. .6% annualized. that follows growth last year in calgary of about 4.4% in real gdp. some would say we were overheated before and now it's a matter of a little bit of contraction, but a lot of opportunity. a lot of counter cyclical opportunity. >> what are is it, where? >> for example, a lot of folks are saying i want to get into canadian energy. i am not sure about the price, but the price is good. we are seeing a lot of interest in other areas. i had a large pension-backed real estate developers in my office saying construction prices are starring to go down. we want to put $600 million into downtown. for a lot of folks -- >> there is a lot of crazies. as you may or may not know how much if you aggregated the
effect of oil and federal gas and the ripple or effects of that, what percent of the economy is related? >> it used to be more than half. it's now down to less than 30%. we are changing a lot, for example. >> that's not a direct tie to the client prices. it has been happening overtime in. >> interestingly -- >> what's taking its place? >> we have an enormous amount of deal flow through. much higher than production in canada. because of that 17 out of 20 global investment banks are there and becoming a large center. once you know how to do deals in energy. we are seeing a lot of tech and enterpriseship and small business. as the city grows, a lot of services. >> how critical is the pipeline to you? >> market access is critical. we have to be able to diversify our markets for that. the third largest in the world. only one customer in the u.s. we
need our own version of president obama's in all of the above strategy. access to the gulf coast and the pacific and atlantic coast. there a number of different ways to get there. there many, many other rpgz options and the amount of shipping by rails is through the roof. we are seeing a lot of other things. for some reason that one-meter wide pipe has been asked to bare the sins of the economy. they are not going to end the necessity or not going to change. is now that is baring that. >> getting market access makes science for the u.s. and consumer. it makes sense for canada. we will get there. it may not be what we think it will be, but i know the access will come. the irm perative and the policy
and market is too strong. >> thank you for coming. great to see you. come back any time. good to have you here. >> the u.s. conducted over 20 air strikes in iraq and syria targeting isis against the militants. the stror group claimed responsibility for a second saudi arabia suicide bombing of a shiite mosque earlier this year. today according to the joint combined task force leading here operations in the region. david philipps was in iraq last week as ramadi fell. welcome back. what was it like to be there on the ground as that happened? >> it's a defining moment. the fact that they fell to the islamic state without much of a battle reinforces the fact that iraq doesn't function. >> it's a stateless state? >> it's run from tehran the government in baghdad is a proxy for the government. the iraqi armed forces don't go
into battle. >> you would agree with something the secretary of defense said earlier this week. they do not seem to be combat-ready? the iraqi forces? >> he is too kind to them. they are not only combat-ready, but leave the keys in the ignition and the state-of-the-art equipment that is made in the usa is given by the iraqi armed forces to the islamic state. >> what is likely to be the out come here as isis seems to be acquiring more and more territory. what are the alternatives to beat them back? >> there no good alternatives. >> simply put. >> isis is on the march. they have taken ramadi in iraq. instead of trying to treat iraq as a functional state, the u.s. needs to recognize that the only effect in fighting force to hold back the isis advance are the kurdish. their president came and saw o
about amma on may 6th and gave them a list of heavy offensive weapons. they need that in order to hold their,000 kilometer frontier. they have a policy that everything goes by and through baghdad. we haven't gotten back to them yet. if we are serious about defeating and destroying isis we have to work with fighters who are serious with going into battle and they are showing they are ready. >> thanks for the report for us. david philipps at columbia university for the study of human rights. you can logon to power lunch for more of david's commentary on how he thinks isis could be defeated. >> fifa elections going ahead despite the arrest of major executives. one said enough is enough and he is speaking out. plus -- >> finance just wasn't his style. this banker traded his wall street office for a madison
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. >> we have cut our losses off the session lows. still lower by about five points, but they are nearing and the dow is down about 60 points. banking was not for him. so this employee made a move and that brightened up his career. >> it seemed obvious to everyone but me that i should be doing something other than finance. # >> celebrity hair color. i used to work on wall street. i worked at jpmorgan for two years and international bonds. it was a lot of front work. i needed a creative out willet. i went to classes and i did a lot of painting. a lot of my friends were doing artsy partsy things and i was tired of paying for drinks and
wanted to be a starving artist. i left jpmorgan april of 2004 and i wanted to find something else to do. one of my good friends was a hairdresser and i used to help him learning how to blow dry and basic styling. he encouraged me to think about going to beauty school. i like being artistic and also like dealing with people. i thought i'm going to do it. i was in beauty school for about five months. i knew i would be a colorist because of my background of painting. i was in new york bag zeen and from that moment on i was busy. a big part of jeff's success. i'm jeff's coworker and former boss. hair color is a lot of numbers.
you have to be precise, but you have to be very personable. >> i have celebrity clients. i do a lot of packaging for a lot of those you see on the shelves and travel all over the world doing photo shoots for them. practicing buenos aires and turkey. you feel like you are hanging out. it's not a grind. i'm living my dream right now. >> highlights with jeff range from $300 to $1,000 per appointment. more than mine. here are this hour's power points. baker hughes pulled another 13 rigs from the oil fields bringing the countdown to 646. calgary mayor told power lunch business is not great, but it's not bad either. they are less depentent than it used to be. it used to be 50% and now less than 30. humana is working on a possible
sale of the company. if you isz missed any of the big stories, you can visit our website. fly eastern airlines and travel to cuba. you can cross both of those off your list at the same time. here's phil to tell you what is ahead on power lunch. hey. >> eastern is back. eastern airlines. it's flying again. what you say, when can you fly it and where? we have the answers coming up on power lunch. the challenges of keeping everyone working together can quickly become the only thing you think about. that's where at&t can help. with the tools and the network you need to make working as one easier than ever. virtually anywhere. leaving you free to focus on what matters most.
coming up at the top of the hour, why it's shooting higher and why next week could be huge for the market. the big money playbook. $342 billion worth of investment coming your way in a market paradox. we will explain that at the top of the hour and we will keep track of the humana developments in the hour. back over to sarah and tyler. >> eastern airlines had the first flight in the 21st century departing for miami, but the
destination would not have been possible. phil brings us the story and explains. >> back in the 70s and the 80s when eastern was at the height of success, i'm not sure anybody ever imagined it would be supplying into cuba. that's what's going on. the new eastern airlines starting as a charter airline at the first flight late yesterday and more flights continue, flying as a charter carrier. these are not old planes. these are a fleet of 20 planned with commercial service planned throughout florida and eventually along the east coast. it's natural to look at routes south of us as well as what they served out of here be it to new york or d.c. or the midwest. we haven't crossed that bridge yet. >> for will probably be at least a year or so before we see
commercial flights. i love this. back in the late 80s and early 90s. it went out of business in 1991. they were flit up by a number of carriers. for them to be in the airline business, but it's tough for a niche carrier and it's coming at a time when you take a look at the airline index. the shares are under pressure because more kpft is coming online. new eastern believes they can pick autopsy routes here or there, operating out of miami. you cannot smoke like you did on the old eastern. back in the day, you were firing up a hole in the back of the plane. >> not i but i do remember eastern's constellations. four engine planes and tritales and what were the others? lockheed electras.
anyhow. those were the die days. that will doll it for the first hour of power lunch. great to be with you. i'm sticking around for the second hour of power. >> hello, everybody. i'm melissa lee here at the market place. brian has the day off. we start off with the huge developing story on humana. sharply higher on reports of working with goldman sachs on a possible sale. tracking the best day since 1993. hitting two-week highs in the back of this story. you have more on this. >> thanks very much. joining me to talk about this possible transaction involving humana. to me it untils something i know you have talked about recently and consolidation. >> last week's game plan we said that this could happen. they would put themselves up for
sale and debated that. the companies themselves have been telling people they think the government would bless further consolidation. after what we see with the cable company, yes, i think this is a move that is reasonable. do nay have a weaker position or what? >> a bit of both. i think they feel like -- they have been shareholder friendly. they can get more out of this. they would do it. they have not been particularly standoffish about this issue when they talked to big investors and say we understand there is consolidation coming. it is reasonable and by the way, it's a great company. this is not one where people
would say they are in trouble. we will do whatever is best. that has been their philosophy. >> look at the stock's move today up 20%, $36 a share. 50% over the past year. >> they have been around talking. talking positively. >> as you run through the calculus here, who are the likely partners? obviously cigna has been a company that has been rumored. saying it logically considered to be a company that could be in play at some point. aetna is a company that wants to get bigger. could it happen? stranger things. >> the consolidation. >> i don't think unh is coming. >> the biggest players are in the area.
unh and aetna and cigna. >> anthem and humana. they were the most likely to jump. >> edna and cigna. the most widely talked about, but in terms of the valuation, a couple of weeks ago they had a note out and downgraded humana and investors hopes surrounding some sort of deals should be short-lived. guess not, huh? >> that may have been a recognition that on earnings alone, maybe the stocks are ahead of themselves. when you see them pay a lot of money and the stock goes higher whoever buys humana can pay a little more than we thought because they seem to like consolidation. >> a heck of a lot more than comcast was going to pay.
>> they were talking about a price for that. that is extreme. there is a sense that people say this is so frothy. they have all been around talking in the last few weeks. they have said pretty much in unison, there will be consolidation. >> you tiptoed and pinpointed a couple of other who is might be next. >> i think that the ones that could make sense are the ones that could be combined. they will be cigna and anthem. unitedhealth. >> is there an argument down the road and this is in my mind me i'm crazy here. at some point over the next generation when you and i are consumers of health care big time. that the hospital companies and the big medical centers are going to be the owners of insurers and insurers will own
companies. could it go where the help companies merge? >> it would make sense. one of the things we are seeing over and over again, we are seeing the different -- comcast buys content. there is a view that if you owned a hospital maybe you would have a view of how much it would cost. these are companies that frankly you offer the solution and maybe they are like that. # you go to the hospital and doctor and pay the insurance premium. >> the regulateors would say we need more competition because it's tough enough to get an approval for the mri and approval for more expensive drugs. they would have too much power. i think the companies themselves think there is a five into
three. the regulators we didn't think there would be resistance to the comcast deal. there wasn't. >> what do you think when there is consolidation. when you hear about the treatments and the industry becomes smaller and smaller, do the insurers have more leverage and saying the drugs are too expensive? what's with the ex-trapilation here? >> you are right. that's something that we spread a good article about them saying we are going to put the -- we are going to get these drugs. i think that yes, the issue for the american people they say we will have more denials of good treatments if these guys get and are so powerful. the fact is that humana did not just say we are not for sale. that does say to you, something
is going to happen. >> this is a big story. the other thing that you talk about, regulatory concerns here earlier this week. i was reading stories about how much premiums are likely to go up on the health care exchanges. many of those products are sold by them. >> a lot of people send policy holders. >> a lot of people felt that the entities wrote the law because we didn't go to a different system entirely. they had a free run. they have been fabulous stocks. you put the stock. this is just a group that made money because they have been able to raise rates. >> stick around. >> sure. >> always great to have jim cramer around. >> the cancer is releasing and discussing. a look at what to expect and the stocks to watch.
>> the news flow is starting already. results from crist ol meyers. the drug reduced the risk by 27% compared with the teamo therapy. it harnesses the immune system to fight cancer. they are working in a space and will see their conference as well. they are focused on pfizer and i brands which is approved this year. smaller will be a focus and will be bringing you interviews with many of the companies starting monday morning in chicago. back to you. let's bring in that closely. and within your universe you are
expecting that one to move. interesting. # that came out of the abstract form about two weeks ago and we will get the full data set next week. people will be looking closely with this. this is a highly touted program and we could have sales to vest where there is a $1 billion drug. we will look closely at the subsets of women that seem to respond best with this drug. it does have side effects and namely diarrhea, rash fatigue. >> all is not lost even though it was disappointing at first. is this a binary out come here? we know it was a successful trial and it ought to be approved on that basis. what we will be looking at
subsets with early stage breast cancer seeking to get the benefit to put it in the drug side effects which are substantial. >> we are hearing a lot of talk about the pipeline and the take over target. are you getting a sense that astrazeneca is going to be a major player this weekend. >> it's one of the playerers in the oncology space. that's a tremendously competitive and lucrative area to put this conference in perspective, oncology is the number one therapeutic category. they are well over $100 billion and there is a lot of innovation going on here. we expect as financial analysts this class to grow from about 18% up to 21% of all drug sales. one of the big drivers are going to be the molecules where astrazeneca and america and they
play in her piece. >> i know you like bit of ol miors. when you take a look at it you are going for the larger players or the smaller ones that might have more binary and volatile outcomes. >> some of these are so hyped, i think the notion of binary is on the table. they have this tremendous cancer portfolio. it's almost as if when they go to the conferences, it's more and more biotech in the eyes of the investors. that's my favorite. >> in sight, they have 23 abstracts. it is going to be dumped over the weekend. what do you focus on? which drug in particular? >> we are trying to figure it out and sort through the big players in conjunction with the therapies. they are here to stay and
bristol and merck and astrazeneca are the main players. the real theme of the weekend is who will combine best with the major pd 1 players. of all the stocks that we're following, insight is going to be my top nominee to make it there in combination with the pd one. they have a drug called an ida one inhibitor. we will get additional data on that molecule towards the early part of the year. it looks like it will be a combinable agent with the pd ones. >> thank you very much. eric schmitt, thank you. thanks for stopping by. tonight forget to watch mad money at 6:00 eastern time. melissa? >> back to the other big story at this hour the huge move in oil is up about 5% now. let's bring in the chief commodity strategist. good to see you. thank you for having me. >> for doesn't look like the
normal culprits. it's not commensurate with the oil move and the inventory was mixed. production was higher even though inventories dropped. >> it's a rate count number. the 13 drops this week. there was an expectation that it might be a lower number. last week we had one rig and people are saying what if we move into positive territory and they are putting rigs back to work. they have 13 taken off and there was an expectation that will start to slow in the back of the year. >> there was a big opec meeting and the expectation is nothing is going to happen. >> they will roll over the quota, the expectation. >> what you want to watch for, any signs that the russian energy minster shows up and said russia will cut. what they say is we are not going to cut a low. we must have russia cut with that. that can mean the black swan event. other than that there is an expectation that will roll over the quota. they think the market will pull
higher next year. >> do we have a good read? what's going on in saudi arabia. there has been a change in leadership. they are also continuing just the spending ramp for yemen. >> huge amounts of spending. >> they are reliant on it. >> 90% comes from oil. we have a situation where they keep spending at the lower price. they took $36 billion out of the resorts, almost the total deficit projected for the year. the saudis are saying look we are making a gamble that they will recover. they are no longer talking down the price of oil. they are talking a recovery. they will be looking to 2016 for a rebound. if that doesn't materialize, they'll consider pulling production. they are in a wait and see mode and it will work their way. >> where do you see it by the end of the year? >> brent around 70 with a $6 discount. we are confident that it should be going around 79 or 74. >> thank you so much.
>> thank you for having me. >> we have a big show coming up on monday. brian sullivan will be live from the rbc energy and power conference speaking with the ceos of marathon petroleum and superior energy all coming up monday here on power lunch. tyler? >> here's what's on your power menu for the rest of this hour. the fifa fallout continues. one company that calls itself the non-sponsor of the embattled soccer group. the big money playbook. we have $342 billion and counting. worth of investment advice coming your way and we will tell you about the hottest markets for buyers and californiaers. a market paradox. why smaller is bigger right now. stick around and we will help explain that when power comes back. blap
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when paul singer speaks wall street listens and he is touting a big bet on bonds. >> singer has been railing against the easy money policies for sometime. he is arguing for aggressive bets against it. shoe shorting treasury and bonds in this case. in a letter issued yesterday by my colleague on cnbc.com he speaks of betting against bonds in the u.s. and uk and the japanese government as the so-called bigger short. a play on words with the big
short. ed trades against the so-called shortages by the same name. the bonds elliott represent shorting is a great deal of risk writes the management in the letter. they hold them as a perceived safety net, but the day when the perceptions are challenged and they change their minds to find it blocked by everyone else doing an about-face at the same time is going to be one heck of a day. he goes on to talk about the mentality in the markets which at times can make it tougher to trade. they recommended shorting the german bun only to acknowledge that it was a well-timed and poorly executed trade. typing is going to be key here. >> thank you so much. by the way, paul singer will be at the conference and to register, head over to
delivering alpha.com. >> thank you very much. dom is with me here and you heard what kate said. you were watching at home and you want to take advantage on some of the singer's advice. we have the telestrator. take it away. >> what we got is a situation where if you are an investor you can borrow the bonds and short them and try to buy them back at a different time in the future. for most people, you can't do that en masse. let's set the stage. this is a 10-year note. back a year ago, it was 2.4%. you can see 2.1%. bond prices rising as yields fall. they have been buying them up unlike the trade happening and described by kate. the price actions themselves you can see the interesting things happen as you advance
ahead. >> it's usually here. >> exactly. this is the 10-year price. bond prices go up. when they fall yields go up again. take a look at this. this move we saw earlier this year was a 15% drop in the price of the treasury note. the 10-year note. that's a big move. how do people play it on the short side of things? one particular etf is what it is known as the spent-year tlt. this tracks the chart that looks similar to what we just saw. it tracks the index of longer data-type securities. as bond prices go higher they go up with it and this is the price market. if you want to be short -- you can short that as well. these are different ways to play. for those people who are looking at things like this this is one
product. this corresponds to the daily move this is that index. unlike the first two charts that we showed where the prices mimic each other, this is not the inverse of those other ones. it only tracks the daily move. a lot of these do not track the trend or move of the index and just the daily moves. inverse or not. this fund here takes the view that it will go in the different direction as being on the bond market. this is a way for some people to play it. i want to make sure that people understand this is not going to mimic the opposite of the underlieying intext.
it will just do the daily move. it will get performances between the two. >> shorting them is usually the better way to go. >> coming up next the buyers and the sellers. we will tell you where they are. the giant leap for the robotics. the coolest video you will see today when power lunch is today. blap
>> breaking an hour ago. fifa will continue as the president despite the massive allegations of fraught. bribery and even slave labor as that nation builds stadiums ahead of the world cup. adidas and mcdonald's is among the sponsors but at what point does a company need to pull its sponsorship? ceo of australian sports wear company is dubbing itself the official non-sponsor of firks ifa is calling for them to step down. if i mispronounced your last name please accept my
apologies. why do you think it's important for companies big multinational companies, the biggest to pull away from fifa. >> these are companies with their own professed set of values and principals. we are not asking them to pull away but to get reform within fifa. all the while while they professed, they continue to support these guys the way they are. then they are not being true to their values and being hypocrites. >> have you been asked or suggested to you that you engage in any kind of underhanded conduct in order to secure a position in soccer? >> no, we are nowhere near the size of these other guys. we are a minno to them. we have a set of values and we
won't play those games. what could they do aside from threatening to walk. what could they do to bring change that you would like to see happen? they have to be reformaled properly. we have to change the leadership. it's either he goes or we go. simple as that. >> have you spoken to any of these companies about the position you feel so strongly about? >> i am in love with coke and we are planning a meeting. i suggested to them that that meeting should be there. >> continued good luck to you. the ceo of the australian
company, skins. week as well as the month. he will tee it up for the close. we will see you a pop here. well over $60 a barrel. all coming up on power lunch. stay with us. blap the technology changes the design evolves the engineering advances. but the passion to drive a mercedes-benz is something that is common... to every generation of enthusiast. the 2015 dream machines, from mercedes-benz. today's icons. tomorrow's legends. visit the dream machine event today
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here's your cnbc news update for an hour. despite separate investigations into corruption the 209 delegation gave him a four-year term when he conceded defeat after losing 133-73 in the first round of voting. insurgents claimed they seized the last city in the province that was still held by the government. they have not mondayly confirmed the authenticity of the video that was obtained. floodwaters continued to rise in the houston area. 2/4 have overflowed and water has flooded the streets and caused significant damage and at
least seven deaths have been confirmed. the washington monument reopened after experiencing a power failure wednesday. no one was inside and it was the third time there had been a problem after the reopening after 2011. that's the cnbc news update for this hour. >> final oil trades. let's go to jackie for the close. >> hi, again melissa. we closed at $60.30. short covering into the weekend. that's one of the first reasons we were hired and the oil decline was bigger than a lot of people were expected. traders are saying there is a perceived boost in demand domestically. not only for crude. they are claiming an attack on the mosque. a baeker dollar. this is the storm to send us higher. that settled over 60. that's monday june 1st. >> joins us now on the phone,
robert is a health care strategist and president of health policy and strategy associates to talk a little bit more about humana and the possibility that it could be choired or merged with another of the big players. is this a good idea for humana? >> i think it is. it's at the board with humana. this is an excellent time. it's the publicly traded industry a few years ago that crossed a line where more than 50% comes from. # they are not creating a great deal of political heat. they hang the plans very well and the proves are high as a result. in a few years, we will have real pressure on entitlement reform and they may change. if i were sitting on the board, this is a good time to cash it
in. >> who is the best partner? >> if you look at top five you know the anthem? they are all really good partners. united would have problems, but cigna, aetna, anthem all of good fits. if anthem were to do it they become the leader in the medicare advantage market. they are already the leader in the market. edna vaulted to the leader in medicare advantage and that would be a terrific fit. they are the third and second larnl offest advantage players and the fourth and second largest and great fit. cigna has little in medicare business relatively speaking of the industry and this would vault them to number one. you have got a good combination no matter where you look. >> you mentioned one possible hairball with the antitrust
westerns. >> i think they would be below the threshold. the only problem and this is an important that is a bit like antitrust called the blue rule. anthem really is the blue cross, blue shield operator in the states. it's the combination of a number of traditional plans largely. there is a blue rule that said 2/3 of a plan's national business must be marketed under the blue cross, blue shield trademark. it's hard to see how anthem could do the combination and not run into difficulty. they think they can get around it. that would be a challenge for anthem that probably means that aetna and cigna are the one most likely players. i think cigna would be an interesting take over target by someone like unitedhealth care. that cigna unitedhealth care merger might be the only one
that unitedhealth care could clear the regulatory hurdles on. >> very interesting playbook. thank you so much. i'm sure we will talk to you again soon. melissa? >> time for trading nationful we are looking at the greenback. craig johnson is a technical analyst and a currency trader and we have seen good moves in the dollar particularly dollar yen at a 12-year high. what do you see? >> let's look at it and see where we see the dollar at this point in time. they are sending a strong message that the economy is getting better and we continue to see strength in the u.s. dollar and ultimately what i see happening with weakness over the last several weeks and year is a pull back in what we believe is a longer term up trend in the dollar. it is good support with the rising average at about 24 and change. to us it looks like a correction. keep in mind that the price we have seen in the dollar has reversed about a five-year
downtrend. that's something we don't want to ignore. to us it's a low double-digit pull back. that's the way we should be trading this. >> the upside seen in the charts. >> right now they do. the fundamentals are based on the idea that the market is convinced. no the a matter of if but when. they lit the fuse under the dollar which is why they went to 12-years. time is coming soon for them to raise the rates assuming it goes on a growth path. it's the assumption. 24x week we have data coming out and that will give us an insight into how well they are performing after they shed the problems. if we see an improvement, it could be a bear trap. they will be disappointed on the notion that they will have to
wait as long as 20 caen before they get normalized rates. >> thank you. boris and craig. head to the website. styler. >> are if you pla know to go shopping for a new home diana will join us with the nation's hottest housing markets for buyers and sellers. diana? coming up if you are house hunting. i can't tell you how many tweets and e-mails i'm getting, but that doesn't mean every market is a seller's market. today's home buyers are finicky and not nearly as much as they might have been in the past. therefore you must know your market well and know its current value even better. just under 1/3 of housing markets today are seeing homes sell for above asking price. 60% are still seeing homes sell for below. and in the end, about 14% are
seeing homes go at market value. this of course is according to realty track. where are sellers in the driver's seat? no surprise the bay area of california where homes are selling for 108% of asking price on average. sellers are also getting more than asking price in washington, d.c. winston-salem, north carolina and cass county north dakota. buyers have control in st. louis, missouri baltimore, pittsburgh, pennsylvania atlanta, andburgington, vermont. about 80% in these markets even though splice of listings are limited. where are they even? raleigh, the d.c. suburbs of montgomery county and riverside county, california. believe it or not, phoenix, arizona metro area. knowing your neighborhood's price maximum and even more important to know when to walk away from a deal. back to you.
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welcome back to power lunch. i'm mary thompson with sad news from american express. in a note to employees and contractors, the company's ceo announcing that the firm's president ed gilligan has passed away. he became ill on a flight back to new york this morning and passed away. he leaves a wife and four children. gilligan in the note he said
devoted his career to the company started as an intern 35 years ago and moving up the ladder to vice chairman and president in 2013. he goes on to say that he was a living embodiment of values with service, trust, and integrity. gilligan is one of the executives and the successor. the age made it less likely that he would succeed. sad news for american express, the employees and contractors today. gilligan, the company's president has passed away. >> a sudden and sad turn of events. let's get back to the market. on a mildly down day with the money manager at 342 billion in assets. a little more than i have in my wallet. with me is ceo of principal global investments. good to see you again. i asked a towel of prior guests
with katie and christina hooper. on a scale of to ten, how concerned are you about the u.s. economy? are probably or three or a four. i think to me i am confident that the first slow growth was for the west coast port strike and the bat weather in the northeast. i think that added up to a disappointing first quarter. i am expecting to see the second third, and fourth bounce back a little well. 2.5 and 3 prgs percent is the most you could expect. that's good enough to keep the economy and the market moving forward. >> if i'm like a lot of investors over the past decade i put a lot into bond funds. maybe i should be buying stocks. what should i do with them now. >> i'm working out quite well. if you had enough duration i kept up which in a bull market is good for bonds. i would think it depends what you are thinking about the
assets. you need them for the short-term commitment, keep the bond funds. equities will be volatile. if it's longer term you should be looking at searching into ek wirdys. if you need the income maybe it's high yield or real estate. those sort of areas thaw should be moving into. i think high quality bonds are not an area that is going to give you very much return looking forward. >> so if i had incremental cash to work today, where you would put it? >> i would say equities. the argument i would make is relative to other developed countries, the u.s. has a better growth profile and that tends to support profits and the market. even in the bad first quarter, the first quarter set back for growth. the first quarter numbers adjusted for energy and some of the currency issues. we are at almost double-digits. that say good result.
>> the final question. we talk about $342 billion worth of assets. that is the corporate stash. i would like to know what you do with your money in terms of an overall balance between equities and bonds. tell us what jim does. >> what i do has obviously -- and this is public record. i am delighted to have in the proxies. other than that, that gives me a fairly big exposure but i have a balanced mix and fixed income and personal real estate. that's not aed about place to be with more than one home. >> always great to see you. thanks for coming out. appreciate it. >> before the break, we told you about a market paradox. why smaller is bigger. dom is here to help answer that. >> in the last segment, the economy may not be all that bad. if you had that faith in the economy, maybe small cap stocks
are where you are supposed to be or want to be. if you look at the overall picture, for the small cap index year to date versus the large cap, we are seeing outperformance. not crazy, but about 1.2%. the russell 2,000 is doing better. the small caps are. if you look at the last month to date, we will close the books on what's happening. it's that same outperformance. up by over a percent, better than what's happening with the s&p 500. small caps are outperforming. the reason why we want to call your attention is they will be a big part of the overall market focus fur the coming month. the reason is because a lot of stucks are measured by the index and up for the reconstitution. the russell indeces every year go through the rebalancing process where they pick and choose which go into the russell 1,000 and large cap and the 2,000 and the broader market. here's the interesting part. according to nicholas at converge ex, that happens once a
year and is important. about 4.4$4.4 trillion worth of assets tracks the indeces. the one, two, and3,000. it affects 59% of all u.s. stock market by total market capitalization. it's wide ranging and $43 billion, collis estimates is expected to be traded for the rebalance. those changes are effective june 26th. over the next three week melissa, you'll see updates about possibly where these lists are going and what stocks will and won't be part of the indices. up next we are following the big money. we'll tell you where the big institutional investors are placing their bets rye now. later, forget the spelling bee. a 17-year-old genius just invented something that could forever change the way we fly. we'll hear from him when "power lunch" returns.
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welcome back. if you want to spot the next big trade, take a look at what the international investors are doing. eric, you're been pouring through the data. in terms of the top 20 institutional investors, what did you find? >> top 20 holdings by tens of thousands of portfolios the data comes from e-investment. look at the institutional investors only of course they matter because they tend to lead everybody else. intel is the stock that broke into the top 20. so that stock is in and the stock that came out was qualcomm. which is a big surprise. these things tend not to move that much. qualcomm was ranked 14th at the end of the year 2015. qualcomm was gone the first quarter of 2015. it's had a big fall. we're looking at enintel making its way into the top 20. >> that because it's making a month for intera possibly.
what are the equity investors looking at. >> the value guys ten to be big blue chip names. they are buying target and general motors. they're getting rid of caterpillar, hewlett-packard, at&t. >> general motors also interesting because of possible consolidation of the auto industry. >> right. it's interesting to see how the institutional guys can lead the market. that's why the data is interesting to follow. >> the data as of march 31st, end of the first quarter. thank you. >> thank you. >> i love that necklace. where's that key on your -- that is neat. >> it's a key to your heart, tyler. >> you already had it you know it. >> oh. >> love it. a join the leap for robotics. we'll tell you what you're looking at when "power lunch" returns. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪
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want to bring your attention to shares of bristol-myers. sudden fall in the stock. now down 7.25%. the timing before the big asco conference, it's a story we'll continue to track. it's the latest sign that robots are taking over the world. look at this fellow here. not really. check out this video. that doesn't look like a complex machine at all, those geniuses at m.i.t. created this robot. it is the first four-legged robot that can automatically jump obstacles.
beautiful form. >> that's a cheetah? >> they call it a cheetah. >> it's not spotted. >> it's not spotted, no. >> anyway. >> yesterday we told you about a high school student, raymond wang a serial entrepreneur from vancouver. the 17-year-old won first prize and $57,000 in the prestigious intel science and engineering fair for his invention of an airline germ buster that creates personalized breathing zones for all passengers throughout the cabin. yes, he's applied for a pat en. he design a smart knee brace, self-cleaning outdoor garbage can and rain water to electricity converter. he plans how to get these inventions to market. sure enough he has it all figured out. >> i'm hoping to go to college somewhere in the states because there is a ton of opportunity there. and i'm hoping to go into a program that's related to not only engineering but also coupling that with the business aspect. because it's great that i have all these fantastic ideas but to
really be able to implement them, that requires leveraging these business knowledge and to be able to effectively communicate my ideas and to be able to get them implemented in the real world. >> all right. by the way, we're watching bristol-myers, down 7%. more on that on "fast" tonight. >> "closing bell" right now. hi everybody. welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. we have a lot of moving parts and pieces today. >> do we ever. >> we'll try to get to all of it. it is the last trading day of mott. this last hour could be especially dramatic. the russell rebalancing. we'll be making its annual adjustments here and there and we'll be bringing you all the action right here on the floor. it's going to get crazy here in the next 45 minutes. >> should be fun. we'll show it to you. oil, meanwhile popping more tha